Despite slowing growth, the World Bank (WB) still expects that Vietnam's economic growth will be at around 6% in the period of 2016-2018, and will remain one of the strongest growth economies in ASEAN.
On April 11, the World Bank (WB) has announced the Report on Updating East Asia and the Pacific economy, in which cutting its forecast of growth prospects for Vietnam this year and next year.
Vietnam's lenders are gathering speed, posting the second-highest growth by country in this year's ranking of the top 100 banks in the Association of Southeast Asian Nations (ASEAN). Global financial affairs magazine The Banker of news organisation The Financial Times made the announcement in an online report this month.
Vietnamese banks – 19 of which made the ranking – grew their assets by the second-highest amount, 15.66 percent, and although they still contribute a relatively small share of the total assets in the ranking, 7.46 percent, they are up from 6.21 percent in the previous year. However, growth does not necessarily translate into profitability, the report said.
Vietnam's banks stood out in terms of asset growth, with Vietnam Prosperity Bank coming out on top with a 35.02 percent increase, followed by local competitors Saigon Commercial Bank and Shinhan Bank Vietnam, which expanded by 34.22 percent and 33.32 percent, respectively.
The country's banks look to be poised to continue this rise. In addition to robust growth and stability, banking penetration remains among the lowest in the region. Only 30.86 percent of the population aged 15 or over had a bank account in 2014 in a country of 91 million people. Vietnamese banks expanded their operations, they did not raise capital at a corresponding pace. Vietnamese banks registered a meagre 4.54 percent uptick in Tier 1 capital, the lowest ranking among the countries measured.
The report showed that Indonesia's institutions dominate the returns tables, with Bank Rakyat Indonesia boasting the highest ROA and ROC in the ranking, at 3.85 percent and 37.58 percent, respectively. Bank of Central Asia followed on its heels, coming second for both ROA and ROC, with 3.75 percent and 32.22 percent, respectively. Overall, six of the top 10 banks for the highest ROA and five of the top 10 banks for the highest ROC are Indonesian.
The report said that Vietnam's economy has dramatically overcome the global volatility thanks to increased domestic demand and industry towards manufacturing achieving good results.
However, if you compare the growth of Vietnam with other countries, "Vietnam is still a country with good growth. Despite slower growth, the World Bank expects that Vietnam's economy will grow at around 6% in the period of 2016-2018, and will remain as one of the economies of stronger growth in ASEAN," said Sudhir Shetty, chief economist for East Asia-Pacific region of the World Bank.
What does Vietnam need to do to maintain growth in the more distant future? Mr. Sandeep Mahajan said that Vietnam is an attractive destination of foreign direct investment, especially in attracting investments in manufacturing and processing industries. The problem is how to be able to connect FDI with domestic private sector, which is a better way for the private sector in the country to achieve higher productivity. In addition, Vietnam should implement fiscal stability, promote the flexibility of the exchange rate and raise the level of foreign exchange reserves to minimize the elements of vulnerability.
Source: The Hanoitimes
Keywords: Vietnam's economy, maintains, strong growth, in ASEAN
